Grounded Airline ETF Might be Poised to Take Off | ETF Trends

Amid the height of the coronavirus outbreak, the number of travelers taking to the skies certainly saw a marked decrease, but subsequent bounce could be in store for the US Global Jets ETF (NYSEArca: JETS). Based on the daily inflows, investors have been betting that the ETF might take off soon.

“What we’ve seen is a pattern of consistent $20-$30 million flows day after day, which is really not consistent with a big rise in shares being shorted,” said Dave Nadig, chief investment officer and director of research at ETF Trends.

While JETS has certainly seen its fair share of shorts, more optimistic investors are piling into the ETF as a buy-and-hold play.

“In this case, I think what we’re actually seeing is a lot of people trying to call the bottom,” Nadig said. “Remember, JETS is down something like 56% over the last three months. It’s … one of the only ETFs affected that never caught a bounce. It’s still trading very close to its March lows. So, I think a lot of people are hoping that there’s a government bailout.”

Sealing the deal for a bounce was the recent stimulus package, which also benefitted the sector—the federal government essentially became a value investor with the move to backstop airlines.

“It’s going to act as that buyer of last resort because there’s no question these are beleaguered and beaten-up companies,” Nadig said.

JETS seeks to track the performance of the U.S. Global Jets Index, which is composed of the exchange-listed common stock (or depository receipts) of U.S. and international passenger airlines, aircraft manufacturers, airports, and terminal services companies across the globe.

For investors looking for broad-based exposure to the transportation sector, they can look at the following funds:

  1. SPDR S&P Transportation ETF (NYSEArca: XTN): seeks to provide investment results that correspond generally to the total return performance of an index derived from the transportation segment of a U.S. total market composite index. The index represents the transportation segment of the S&P Total Market Index (“S&P TMI”).
  2. Direxion Daily Transportation Bull 3X Shares (NYSEArca: TPOR): seeks daily investment results equal to 300 percent of the daily performance of the Dow Jones Transportation Average. The index measures the performance of large, well-known companies within the transportation industry.
  3. iShares Transportation Average ETF (NYSEArca: IYT): seeks to track the investment results of the Dow Jones Transportation Average Index composed of U.S. equities in the transportation sector. The underlying index measures the performance of large, well-known companies within the transportation sector of the U.S. equity market.

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